On soft power.

Joseph Nye, former Dean of Harvard's Kennedy School of Government, coined the term soft power in the late 1980s.

Simply put, soft power is a nation's ability to persuade others to do what it wants without force or coercion.

Nye states that the world's most successful nations need both hard and soft power -- power which is the ability to coerce others and shape their long-term attitudes and preferences.

Nye initially set out three primary sources of soft power: political values, culture, and foreign policy.

Traditionally, power in international relations is easily measurable metrics in inflexible terms - think military and economic might.

Soft power uses tactics that are often hard to measure, can take years to bear fruit, and aren't as sexy as a nuclear-powered aircraft carrier.

But today, soft power matters more than ever and shuns carrots and sticks.

Soft power succeeds in building relationships, using communications and storytelling, operating under universal international rules, and harnessing a nation's unique resources that make a country attractive to the greater world.

The United States can undoubtedly dominate others through money and might, but America has excelled in using soft power.

From companies like Apple, foundations like Charity Water, and universities like Stanford to sports leagues like the National Basketball Association, America is a soft power hothouse.

When I read about the Thucydides Trap leading the US and China down a path to increased competition and possibly even war, I think no.

What are we doing if the US can't succeed with Walt Disney World, Levi's, Tesla, Harvard, Serena Williams, Coca-Cola, Run DMC, Kelly Slater, and Detroit-style pizza?

Sitting in London Heathrow a few years back, I was observing a family from Norway. The kids dressed in Under Armour, the parents wore smart casuals from the GAP, and the entire crew was teched-out in designed-in-California Apple devices.

It was the all-American family living in Oslo.

US culture and aspirations have been influential in helping the US government secure partners and enhance alliances.

Sure, there are limits to soft power: it tends to have diffuse effects like jello, and sometimes it is not skillfully wielded to achieve specific outcomes.

However, US economic success and security hinges as much on winning hearts and minds as it does on winning wars.

Plus, with more of the world easily accessed by trans-continental flights and the internet, countries like Germany, Canada, Brazil, South Korea, India, and China are using the same tools and tactics to improve their strength and influence.

If you need help understanding how soft power and geopolitical business communications intersect, Caracal is here to help.

Enjoy the ride + plan accordingly.

-Marc


ITK Daily is geopolitical business intelligence for senior executives with global ambition.

ITK Daily curates news @ the intersection of globalization, disruption, politics, culture, + sport and provides actionable insights and sharp commentary.

The power of shareholder letters.

Writing is thinking.

Writing is clarification.

Writing is action.

And few written documents are more potent than a well-crafted and well-executed shareholder letter.

Lawrence Cunningham has recognized the value of a shareholder letter for years.

Cunningham is an authority on corporate governance, corporate culture, and corporate law and teaches business-related courses at George Washington University that span these fields. 

He has written dozens of books and scores of articles on a wide range of subjects in law and business. 

These include the leading textbook on accounting used in law schools, a popular narrative on contracts, and best-selling books on Berkshire Hathaway and Warren Buffett (The Essays of Warren Buffett: Lessons for Corporate America and Berkshire Beyond Buffett: The Enduring Value of Values).

When individual investors ask what resources to consult when hunting for great companies, Cunningham's advice: read the shareholder letter that the company sends out every year. 

Next to the financial figures, it is probably the most important and most accessible source of valuable information.  

These communications reveal a lot about a company and its CEO.  

The CEO's commitment, desires, goals, and long-term visions are visible in the well-written and purposeful shareholder letter.

Some CEOs use their shareholder letters to obfuscate, patronize, and many appear ghostwritten, but the best share business insights that help readers understand a company.

Use these clues as filters, just as you would the company's financial statements. 

Many companies post such letters on their websites, usually part of the annual report.

The gold standard of the genre is Warren Buffett, whose pithy statement from his 1997 letter to shareholders of Berkshire Hathaway sums it up:

"When you receive a communication from us, it will come from the fellow you are paying to run the business. Your Chairman has a firm belief that owners are entitled to hear directly from the CEO as to what is going on and how [he/she] evaluates the business, currently and prospectively. You would demand that in a private company; you should expect no less in a public company."

In Dear Shareholder, Cunningham's latest book holds letters from more than 20 leaders from 16 companies - several of my favorite companies, including Amazon, Google, Coca-Cola, and Pepsi.

This book is a powerful go-to for inspiration and creativity.

Written to be consumed more like an encyclopedia, you can quickly jump to topics, companies, and leaders.

Cunningham's collection of the best-in-class shareholder letters provides valuable insights - be it better company management or how to communicate better.

If you need help with your writing to ensure it is inspiring and creative, Caracal is here to help.

Enjoy the ride + plan accordingly.

-Marc

Why economic diplomacy starts in DC | Example 1

The National Governors Association had a reception last night at German Ambassador Emily Haber’s residence, where German Chancellor Olaf Scholz sent in a recorded video message. Spotted per Politico: New Jersey Gov. Phil Murphy, North Carolina Gov. Roy Cooper, Colorado Gov. Jared Polis, Illinois Gov. J.B. Pritzker, Puerto Rico Gov. Pedro Pierluisi, Alabama Gov. Kay Ivey, Hawaii Gov. Josh Green, Connecticut Gov. Ned Lamont, New York Gov. Kathy Hochul, Louisiana Gov. John Bel Edwards, South Carolina Gov. Henry McMaster, Utah Gov. Spencer Cox, Delaware Gov. John Carney, Nichole Francis Reynolds,Sherman Greer, EU Ambassador Stavros Lambrinidis, Swiss Ambassador Jacques Pitteloud, Ukrainian Ambassador Oksana Markarova, and Elias Alcantara.

With more than 175 embassies, ambassador residences, international cultural centers, and multilateral organizations like the World Bank and the Organization of American States, Washington, DC, is one of the most globally interconnected cities in the world. DC already has a strong tradition of Lobby Days on Capitol Hill; Caracal believes the time is now for Advocacy Days on Embassy Row.

If you need help with your economic diplomacy, Caracal is here to help.